Shares of Vitae Pharmaceuticals (VTAE) tumbled 30% in after hours trading after it announced its partner Boehringer Ingelheim is placing its BACE Inhibitor drug BI 1181181 on a voluntary clinical hold due to safety concerns. The problem with the drug is that it has caused adverse skin reactions in multiple patients who received multiple doses. The BACE ihhibitor drug is an oral drug that is intended to reduce the increased Amyloid plaque levels in the brain of Alzheimer's patients. A pre-clinical trial demonstrated that the drug has the potential to reduce brain amyloid beta levels by 95%. 

Vitae Pharmaceuticals should be negatively impacted over the short term, but its fate will remain unknown until further testing establishes the true nature of the drug's side effects. And even if the company has to shelve the BACE inhibitor drug for Alzheimer's disease, the company has a structurally distinct type of drug that it can develop as a back-up for the same Alzheimer's patient population. In addition to this back-up drug, Vitae boasts a nice pipeline of other drugs that use distinct mechanisms of action. These include drugs that are targeting Type 2 diabetes, Atopic Dermatitis, acute coronary syndrome, and multiple autoimmune diseases. Only time will tell whether Vitae can continue developing BI 1181181. In the meantime, the company still yields growth potential and should not be disregarded by investors just yet.